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The Limited Liability Partnership Act to benefit Small Entrepreneurs
Thanks to the era of globalisation, liberalization and deregulation, things are set to mellow down for the small businesses. The LLP Bill which will soon be enacted presents a flicker of hope.
LLP format is business model with SME in developed countries -
The LLP format is a popular business model with SMEs in developed countries like US, UK, Singapore and Australia. It would not have been introduced at a better time in India when businesses are finding themselves in the throes of recession. Business risks have escalated and 'unlimited liability' is a spectre which haunts businessmen, day in, day out.
• The LLP form of organization will be a body corporate having a separate legal entity distinct from its members.
• The LLP shall by its name have the power of suing or being sued.
• The LLP shall have the power to acquire, own, hold, develop or dispose off property both movable and immovable.
• The LLP will have perpetual succession and a common seal.
• The registering authority of the LLP will be the Registrar of Companies under the Companies Act.
• The minimum number of partners in an LLP will be two and there will be no upper limit on the number of partners.
• There will be at least two designated partners who are iniduals and at least one of them shall be a resident in India. Consent to act as a designated partner shall be filed with the registrar.
• Any inidual, body corporates including other LLPs and Indian as well as foreign companies. can be partners in an LLP.
• The name of the LLP must end with the words, 'Limited Liability Partnership' or the acronym LLP.
• The provisions of the Indian Partnership Act 1932 will not be applicable to LLPs. The provisions of the Companies Act 1956 will apply only to the extent as notified from time to time.
• Every partner of the LLP is an agent of the LLP and not of other partners.
The mutual rights and duties of the partners of an LLP will be according to the agreement between the LLP and its partners. There will be considerable flexibility in terms of capital contribution and drawings, sharing of profits and losses, role of the management as well as other rights and obligations which can be decided by a mutual agreement. No partner will be held responsible for the independent acts of inidual partners and each partner will be shielded against joint liability created by other partners' misconduct or faulty decisions.
The Bill provides for easy conversion of other structures such as firms, private companies and unlisted public companies into the LLP format. Such a conversion will be followed by the transfer of property of the firm to the LLP and the firm. An SME can aptly convert an existing business into an LLP.
The LLP will perhaps be a more tax-efficient organization owing to the provision which allows an entrepreneur to choose a tax structure depending on the size and nature of his business.
- Winner of appreciation award for promoting SMEs in India.
- 1st ever Indian magazine to penetrate tier II, III cities & the rural belt.
- Industry Partnerships include CII, FICCI, ASSOCHAM, PHDCC, AIMA, ITPO, SME Network, Federation of Indian Micro Small Enterprises (FISME)
- Official Magazine Partners for several national & international MSME events.
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